Soundings

Steven Malanga

Curbing Eminent Domain

The Supremes said that states can still do it, but its easier said than done.

Winter 2006

In last Junes Kelo eminent-domain decision, the Supreme Court deemed constitutional the government taking of private land for economic development. But in his opinion for the Court, Justice John Paul Stevens noted that if states wanted to ban the practice, they could pass laws against it.

Easier said than done. In California, where some 380 municipalities have created redevelopment agencies with eminent-domain powers, enabling them, among other things, to take private land and give it to another private owner, the influential California Redevelopment Association and the states league of municipalities worked successfully this summer to block a law that would have limited the use of eminent domain to such traditional public projects as highways. The legislation never escaped committee. Nor is what happened in California unusual. In Kelos wake, dozens of state lawmakers across the country promised to introduce bills restricting eminent domain. But most of the proposed legislation has wound up stuck in committee, stalled in hearings, or tabled while officials study the issue.

Hope is not lost in California, however. Eminent-domain foes, including Republican state senator Tom McClintock and the Howard Jarvis Taxpayers Association, are gathering signatures for a November 2006 ballot initiative that would amend Californias constitution to include the limits fruitlessly sought by this summers stalled legislation. Initiative backers include the Municipal Officials for Redevelopment Reform (MORR), a California organization of elected officials and private citizens seeking to reduce the massive power of state redevelopment agencies. Led by Orange County Supervisor Chris Norby, MORR notes that the redevelopment agencies consume 10 percent of all state tax dollars, have racked up some $56 billion in debt, and have used eminent domain to gobble up privately owned land for hotels, vast car dealerships, and big-box retailers, including a Costco warehouse store built on a site taken from a church in Cypress. Norbys group dubs the redevelopment agencies Californias unknown government. Not only can the state create them without direct voter approval; the agencies in turn can incur debt without a thumbs-up from voters.

Though Californias current eminent-domain law, like those of many states, limits takings to blighted areas, its language is so vague on what constitutes blight that creative redevelopment authorities have designated more than 1 million Golden State acres as eligible for seizureincluding land in some flourishing communities. Most recently, for instance, the San Diego Model School Development Agency pushed to grab 188 homes in the thriving City Heights neighborhood, because the agency wanted to build 509 town houses, condos, and apartments on the land.

Government ostensibly takes the private property to boost economic development and buoy tax rolls. But a 1998 study by the Public Policy Institute of California found that communities in the state that have engaged in extensive government-sponsored redevelopment have reaped no real economic benefits compared with municipalities that havent done so. Government officials, it turns out, often misread the marketplace and promoted projects that failed to deliver the promised payback. The widespread abuse of eminent domain has left shattered neighborhoods, half-empty malls, and empty car-sales lots, Norby says.

Polls show that 90 percent of Californians favor curtailing eminent-domain powers. Still, many municipal officials in the state oppose the constitutional amendment, as does the Democrat-controlled legislature. Measure proponents anticipate that, to defeat the amendment, legislators and municipal officials will enlist the aid of well-funded real-estate and development groups, as well as businesses like big-box stores and hotels that frequently win prime sites from local governments through eminent domain.

Much is at stake. A successful ballot initiative in the nations largest state, where use and abuse of eminent domain for economic development have become so widespread, could jump-start similar legislation around the country.